Great Fit, Inc., is a company that manufactures clothing. The company has a production line that produces women’s tops of regular sizes. The same machine could be used to produce petite sizes as well.

However, the remaining life of the machines will be reduced from four years to two years if the petite size production is added. The cost of identical machines with a life of eight years is $2 million. Assume the opportunity cost of capital is 8 percent. What is the opportunity cost of adding petite sizes?